UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________________________________________________
FORM 11-K
___________________________________________________
(Mark One)
þ
ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2019

OR
o
TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _____ to _____.        
   Commission file number 1-9618
___________________________________________________


A. Full title of the plan and the address of the plan, if different from that of the issuer named below:

NAVISTAR, INC.
401(k) PLAN FOR REPRESENTED EMPLOYEES

B. Name of issuer of the securities held pursuant to the plan and the address of its principal executive office:

NAVISTAR INTERNATIONAL CORPORATION
2701 Navistar Drive
Lisle, Illinois 60532

 
 
 
 
 




REQUIRED INFORMATION

Navistar, Inc. is the Plan Administrator of the Navistar, Inc. 401(k) Plan for Represented Employees (the “Plan”). The Plan is subject to the Employee Retirement Income Security Act of 1974 (“ERISA”). Therefore, in lieu of the requirements of Items 1-3 of Form 11-K, the financial statements of the Plan as of December 31, 2019 and 2018, and for the year ended December 31, 2019, and the schedules as of December 31, 2019, have been prepared in accordance with the financial reporting requirements of ERISA.

1



SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Plan Administrator for the Plan has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 
Navistar, Inc. 401(k) Plan for Represented Employees
By:
/s/ Samara A. Strycker
Name:
Samara A. Strycker
Title:
Senior Vice President and Corporate Controller (Principal Accounting Officer)

Dated: June 23, 2020

2



FINANCIAL STATEMENTS AND REPORT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
NAVISTAR, INC. 401(k) PLAN FOR REPRESENTED EMPLOYEES
DECEMBER 31, 2019 AND 2018


CONTENTS



3



GRANTTHORNTONA05.JPG
Grant Thornton LLP
Grant Thornton Tower
171 N Clark St Suite 200
Chicago, IL 60601
 
T 312.856.0200
F 312.565.4719
www.GrantThornton.com
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Plan Administrator and Plan Participants
Navistar, Inc. 401(k) Plan for Represented Employees

Opinion on the financial statements
We have audited the accompanying statements of net assets available for benefits of Navistar, Inc. 401(k) Plan for Represented Employees (the “Plan”) as of December 31, 2019 and 2018, the related statement of changes in net assets available for benefits for the year ended December 31, 2019, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the net assets available for benefits of the Plan as of December 31, 2019 and 2018, and the changes in net assets available for benefits for the year ended December 31, 2019 in conformity with accounting principles generally accepted in the United States of America.
Basis for opinion
These financial statements are the responsibility of the Plan’s management. Our responsibility is to express an opinion on the Plan’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Plan in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Plan is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Plan’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

4



GRANTTHORNTONA05.JPG

Supplemental information
The schedule of assets (held at end of year) as of December 31, 2019 ("supplemental information"), has been subjected to audit procedures performed in conjunction with the audit of the Plan’s financial statements. The supplemental information is the responsibility of the Plan’s management. Our audit procedures included determining whether the supplemental information reconciles to the financial statements or the underlying accounting and other records, as applicable, and performing procedures to test the completeness and accuracy of the information presented in the supplemental information. In forming our opinion on the supplemental information, we evaluated whether the supplemental information, including its form and content, is presented in conformity with the Department of Labor’s Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. In our opinion, the supplemental information is fairly stated, in all material respects, in relation to the financial statements as a whole.

/s/ GRANT THORNTON LLP

We have served as the Plan's auditor since 2006.

Chicago, Illinois
June 23, 2020

5




Navistar, Inc. 401(k) Plan for Represented Employees
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
December 31,

 
2019
 
2018
Assets



Investment in Master Trust, at fair value
$
185,574,352


$
154,681,013

Receivables





Participant contributions
120,047


146,203

Employer contributions
3,195,483


3,501,252

Notes receivable from participants
7,844,431


7,320,802

Total receivables
11,159,961


10,968,257

NET ASSETS AVAILABLE FOR BENEFITS
$
196,734,313


$
165,649,270


The accompanying notes are an integral part of these statements.

6



Navistar, Inc. 401(k) Plan for Represented Employees
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
Year ended December 31, 2019

Change in Plan's interest in Master Trust (Note C)
$
33,202,672

Interest income on notes receivable from participants
384,748

Contributions


Participant
11,263,809

Employer Retirement
3,110,862

Employer Matching
2,584,073

Rollovers from other qualified plans
438,868

Total contributions
17,397,612

Benefits paid to participants
(19,501,274
)
Administrative expenses
(228,833
)
Increase in net assets prior to transfers
31,254,925

Transfers to other qualified plan within Master Trust, net
(169,882
)
NET INCREASE
31,085,043

Net assets available for benefits


Beginning of year
165,649,270

End of year
$
196,734,313


The accompanying notes are an integral part of these statements.

7

Navistar, Inc. 401(k) Plan for Represented Employees
NOTES TO FINANCIAL STATEMENTS
December 31, 2019 and 2018


NOTE A – DESCRIPTION OF THE PLAN
The following description of the Navistar, Inc. 401(k) Plan for Represented Employees (the “Plan”) is provided for general information purposes only. Participants should refer to the Plan document for more complete information.
General
The Plan is sponsored by Navistar, Inc. (the “Company”), the principal operating subsidiary of Navistar International Corporation (“Navistar”), to provide savings and retirement benefits for certain eligible represented employees of the Company and of certain affiliates participating under the Plan. The Plan was established October 2, 1991; and has subsequently been amended to maintain qualification under Sections 401(a), 401(k) and 501 of the Internal Revenue Code of 1986, as amended (the “IRC”). The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”).
Eligibility
The Plan is offered to eligible Company employees who are represented by a labor organization under a collective bargaining agreement who have met certain seniority or service requirements under the terms of the respective collective bargaining agreements.
Contributions and Vesting
Participant contributions may be made to the Plan on a pretax basis, a Roth basis and/or any combination thereof. Those participants who were age 50 or older during the Plan year are permitted to contribute additional amounts on a pretax and/or Roth basis. Participant contributions may be elected at a minimum level of 1% of eligible compensation at any time. Total participant contributions cannot exceed 25% of the participant’s eligible compensation (50% for employees covered under the Main Labor Contract between the Company and the International Union, United Automobile, Aerospace and Agricultural Implement Workers of America, and its affiliated local unions Numbers 6, 119, 402, 472, 658, 1872 and 2293). Participant contributions are limited to a prescribed IRC dollar limit; the additional contributions by participants who were age 50 or older are limited to a separate prescribed IRC dollar limit. Subject to Company approval, certain eligible employees are allowed to make rollover contributions to the Plan if such contributions satisfy applicable regulations. Such employees are not required to be participants for any purpose other than their rollover account; however, no salary reduction contributions may be made until such time as such employee would otherwise become eligible to and does elect participation in the Plan. Participant salary reduction contributions and rollover contributions are fully vested immediately.
New employees are automatically enrolled in the Plan at an employee pretax contribution rate of 6% of eligible compensation. In general, such automatic enrollment will be effective the first pay period following the hire date, unless the employee elects to participate earlier or elects to opt out of enrollment until a future date.
For the 2019 and 2018 Plan years, certain collective bargaining agreements provide for an employer retirement contribution. This contribution is employer-provided and is allocated among eligible members of the applicable bargaining unit based on the participant’s age at either year-end, or the calendar quarter end in accordance with the applicable collective bargaining agreement, and eligible compensation. Certain collective bargaining agreements also provide for an employer matching contribution of either 25% of the first 6% of eligible compensation deferred by the participant or 50% of the first 6% of eligible compensation deferred by the participant, as specified in the eligible participant’s respective collective bargaining agreement.
Participants vest in the employer retirement and matching contributions credited to their account in accordance with the vesting schedule as set forth in their respective collective bargaining agreement.  Non-vested contributions are forfeited when a participant retires or terminates service.  Such forfeitures are used to offset future Company contributions.  At December 31, 2019 and 2018, forfeited non-vested accounts approximated $108,118 and $106,747, respectively.  For the Plan year ended December 31, 2019, $300,000 of forfeitures were used to offset Company contributions.
Investment Options
Participants direct the investment of their account balances and future contributions. Investment options during 2019 and 2018 consisted of funds classified as registered investment companies, collective trusts or Navistar common stock.
Participant Accounts
Individual accounts are maintained for each Plan participant.  Realized gains and losses, unrealized appreciation and depreciation, and dividends and interest are allocated to participants based on their proportionate share of the investment funds.  Fund managers’ fees are charged to participants’ accounts as a reduction of the return earned on each investment option.  Also, participant accounts may be assessed a quarterly recordkeeping fee depending on the respective collective bargaining agreement.

8

Navistar, Inc. 401(k) Plan for Represented Employees
NOTES TO FINANCIAL STATEMENTS
December 31, 2019 and 2018

Notes Receivable from Participants
Participants may borrow from their fund accounts a minimum of $1,000 up to the lesser of 50% of their pretax, Roth, and rollover account balance or $50,000, with no more than two loans outstanding at a time. Company matching and retirement contributions are not available for loans. Loan transactions are treated as a transfer between the applicable investment funds and the loan fund. Loan terms range from one to five years, with the exception of loans made for the purchase of a principal residence, which may be repaid in installments over a period of up to ten years. The loans are secured by the balance in the participant’s account and bear interest at a rate equal to prime as of the date of loan origination, plus one percentage point.
Payment of Benefits
Participants may request either an in-service or hardship withdrawal of certain assets in their account. Participants may only withdraw authorized pretax and Roth salary reduction contributions after attaining age 59 ½, or on a hardship basis prior to attaining age 59 ½. Effective January 1, 2019, participants may also withdraw earnings on authorized pretax and Roth salary reduction contributions after attaining age 59 ½, or on a hardship basis prior to attaining age 59 ½. The employer retirement contributions, matching contributions and investment earnings thereon are not eligible for in-service withdrawal.
A participant’s vested account is distributable at the time a participant separates from service with the Company, suffers a total and permanent disability or dies. A participant who is on layoff is considered to have terminated employment after the 12 month anniversary of the commencement of the period of continuous layoff. When the participant terminates employment prior to reaching normal retirement age with a vested balance of $5,000 or less, and does not elect to have the distribution paid directly to an eligible retirement plan or receive a distribution, then the balance will be rolled over to an individual retirement plan designated by the Plan administrator.
If the vested balance is more than $5,000, the participant has the option of receiving the account upon separation or deferring commencement until a later date. If the participant elects to receive a check and the check remains uncashed after 120 days, the Plan administrator will notify the participant that the check remains uncashed. Following an administrative period, if the check remains uncashed, the check will be void and the funds will be rolled over to an individual retirement plan designated by the Plan administrator. If the participant elects to defer commencement, the deferral generally cannot go beyond April 1 of the calendar year following the year in which the participant attains age 70 ½ or retires, whichever is later. At that time, the participant must begin to receive a required minimum distribution. Accounts are distributed in a single sum prior to this date, or may be distributed at this date as a lump sum or a required minimum distribution. Effective on or after August 1, 2019, accounts may also be distributed as partial lump sums for those who are not subject to a mandatory distribution, subject to rules and limits established by the plan administrator in its discretion.
Administrative Fees
Depending on the respective collective bargaining agreement, certain administrative expenses of the Plan are paid by the Plan and charged to the participants’ accounts. All other Plan administrative expenses are paid by the Company and are not reflected in the Plan’s financial statements.

NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The financial statements of the Plan are presented on the accrual basis of accounting.
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and changes therein, and disclosure of contingent assets and liabilities. Actual results could differ from those estimates.

9

Navistar, Inc. 401(k) Plan for Represented Employees
NOTES TO FINANCIAL STATEMENTS
December 31, 2019 and 2018

New Accounting Guidance
In February 2017 the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update 2017-06, Employee Benefit Plan Master Trust Reporting - a consensus of the FASB Emerging Issues Task Force, which provides updated guidance for improving employee benefit plan master trust reporting. The guidance clarifies that for each master trust in which a plan holds an interest that the plan reports its interest in each master trust and the change in value in each master trust interest on separate line items on the statement of net assets available for benefits and statement of changes in net assets available for benefits. The guidance continues to require disclosure of a master trust’s investments by general type but now additionally requires disclosing the individual plan’s dollar amount of its interest in the master trust’s investments by general type. The update also clarifies that the master trust’s other assets and liabilities and the individual plan’s interest in each of those balances should be disclosed. For a plan with a divided interest in the individual investments of a master trust the guidance eliminates the disclosure of its percentage interest in the master trust.
The guidance is effective for fiscal years beginning after December 15, 2018 with early adoption permitted. Entities are required to adopt the guidance retrospectively for all periods presented. The Plan retrospectively adopted the guidance for the Plan year ending December 31, 2019. The adoption of the guidance did not have a material impact on the financial statements and it expanded the disclosures in Note C - Interest in Master Trust.
In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820) - Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement. The ASU modifies the disclosure requirements for the fair value measurements in Topic 820, including the elimination, modification to, and addition of certain disclosures. The ASU is effective for fiscal years beginning after December 15, 2019. The provisions of the ASU are not expected to have a material impact on the Plan’s financial statement disclosures.
Risks and Uncertainties
Investment securities, in general, are exposed to various risks, such as interest rate, credit and overall market volatility. Due to the level of risk associated with certain investment securities, it is reasonably possible that changes in the values of investment securities will occur in the near term and that such changes could materially affect the amounts reported in the financial statements.
Investment Valuation
The Plan follows guidance on accounting for fair value measurements which defines fair value as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the measurement date, and establishes a framework for measuring fair value. The Plan uses a three-level hierarchy of measurements based upon the reliability of observable and unobservable inputs used to arrive at fair value. Observable inputs are independent market data, while unobservable inputs reflect the Plan management’s assumptions about valuation. Depending on the inputs, the Plan classifies each fair value measurement as follows:
Level 1 - based upon quoted prices for identical instruments in active markets
Level 2 - based upon quoted prices for similar instruments, prices for identical or similar instruments in markets that are not active, or model-derived valuations all of whose significant inputs are observable, and
Level 3 - based upon one or more significant unobservable inputs.
The following describes the methods and significant assumptions used to estimate fair value of the Plan’s investments:
The Plan’s interest in the Navistar, Inc. Defined Contribution Plans Master Trust (“Master Trust”) is presented at fair value, which has been determined based on the fair value of the underlying investments of the Master Trust.
The investments held by the Master Trust are valued as follows:
Collective trusts: Valued at the net asset value (“NAV”) as provided by the administrator of the fund. The NAV is generally based on the fair value of the underlying assets owned by the fund, minus its liabilities, divided by the number of shares outstanding. Collective trusts that invest in assets with observable inputs that reflect quoted prices in an active market are classified as Level 1 and all other collective trusts are classified as Level 2.
Registered investment companies (mutual funds): Valued at the NAV of shares held by the Plan at year end, which is obtained from an active market.
Common stock: Valued at the closing price reported on the active market on which the security is traded
See Note C - Master Trust - for the Master Trust’s investments by level within the fair value hierarchy as of December 31, 2019 and 2018.

10

Navistar, Inc. 401(k) Plan for Represented Employees
NOTES TO FINANCIAL STATEMENTS
December 31, 2019 and 2018

Notes Receivable from Participants
Notes receivable from participants are measured at their unpaid principal balance plus any accrued but unpaid interest. Interest income is recorded on the accrual basis. Related fees are recorded as administrative expenses and are expensed when they are incurred. No allowance for credit losses has been recorded as of December 31, 2019 or 2018.If a participant ceases to make loan repayments and the Plan administrator deems the participant loan to be in default, the participant loan balance is reduced and a benefit payment is recorded.
Income Recognition
Security transactions are accounted for on the trade-date basis. Dividend income is accrued on the ex-dividend date. Interest income is recorded on the accrual basis. Net realized and unrealized appreciation (depreciation), along with dividend income and interest income (excluding notes receivables from participants) are recorded in the accompanying statement of changes in net assets available for benefits as change in Plan's interest in Master Trust.
Participant Withdrawals
As of December 31, 2019 and 2018, there were no benefits due to former participants who have withdrawn from participation in the Plan. Benefits are recorded when paid.
Transfers
Transfers between the Plan and the Navistar, Inc. Retirement Accumulation Plan which participates in the Master Trust occur when a participant incurs a change in job status or a job transfer to another affiliate that makes the participant ineligible to participate in their current plan and requires the transfer of their account balance to another plan within the Master Trust for which they are eligible. Net transfers from the Plan for 2019 are $169,882.

NOTE C - MASTER TRUST
Great West Trust Company, LLC (the “Trustee”) is the trustee for the Plan. All of the Plan’s investment assets are held in a trust account at the Trustee and consist of a divided interest in an investment account of the Master Trust, a master trust established by the Company and administered by the Trustee. Use of the Master Trust permits the commingling of Plan assets with the assets of another defined contribution plan sponsored by the Company and its affiliated companies for investment and administrative purposes. Although assets of the plans are commingled in the Master Trust, the Trustee maintains supporting records for the purpose of allocating the net gain or loss of the investment account to the participating plans. The net investment income or loss of the investment assets is allocated by the Trustee to each participating plan based on the relationship of the interest of each plan to the total of the interests of the participating plans.
The following table presents the Master Trust's net assets and the Plan's interest in the Master Trust's net assets as of December 31:

2019

2018

Master Trust

Plan's Trust

Master Trust

Plan's Trust
Collective trusts
$
334,255,673


$
53,299,407


$
530,089,831


$
95,772,659

Registered investment companies
796,145,453


124,914,160


386,607,808


51,256,627

Navistar common stock
34,006,264


7,360,785


33,319,137


7,638,408

Interest bearing cash




54,713


13,319

Total investments, at fair value
$
1,164,407,390


$
185,574,352


$
950,071,489


$
154,681,013

The net investment earnings of the Master Trust for the year ended December 31, 2019 are summarized below:
Net appreciation in fair value of investments
$
175,533,825

Dividend and interest income
42,022,169

Other income
42,171

 
$
217,598,165


11

Navistar, Inc. 401(k) Plan for Represented Employees
NOTES TO FINANCIAL STATEMENTS
December 31, 2019 and 2018

The following tables present the Master Trust's investments by level within the fair value hierarchy as of December 31, 2019 and 2018:
2019
 
Level 1
 
Level 2
 
Level 3
 
Total
Collective trusts
 
$
131,077,488


$
203,178,185


$


$
334,255,673

Registered investment companies
 
796,145,453






796,145,453

Navistar common stock
 
34,006,264






34,006,264

Total assets, at fair value
 
$
961,229,205


$
203,178,185


$


$
1,164,407,390

2018
 
Level 1
 
Level 2
 
Level 3
 
Total
Collective trusts
 
$
98,689,746


$
431,400,085


$


$
530,089,831

Registered investment companies
 
386,607,808






386,607,808

Navistar common stock
 
33,319,137






33,319,137

Interest bearing cash
 
54,713






54,713

Total assets, at fair value
 
$
518,671,404


$
431,400,085


$


$
950,071,489

The collective trusts generally provide daily redemption with written notice with the exception of the JPMCB Stable Asset Income Fund (the "JPMCB Fund") valued at $129,163,221 and $122,561,049 at December 31, 2019 and 2018, respectively and the target date funds valued at $253,225,794 at December 31, 2018 (the target date funds are mutual funds as of December 31, 2019).
Participants can ordinarily direct the withdrawal or transfer of all or a portion of their investment in the JPMCB Fund at contract value. Certain events may limit the JPMCB Fund's ability to transact at contract value. Such events may include plan termination, bankruptcy and other events outside the normal operation of the JPMCB Fund that may cause a withdrawal which results in a negative market value adjustment. The Plan may terminate its interest in the JPMCB Fund at any time. However, requests received for complete or partial withdrawals must be given in writing not less than 30 days prior to the valuation date, upon which the withdrawal is to be effected, and such withdrawals shall be paid at the lesser of book or market value, as determined by the JPMCB Fund.
Participants are permitted to purchase or redeem investments in the target date funds on a daily basis. During 2018, when the target funds were collective trusts, redemption from the target date funds, on a Plan level, was permitted at the end of each month with 30 days written notice. Such advance notice may have been waived if mutually agreed by both Navistar, Inc. and the fund manager.

NOTE D - TAX STATUS OF THE PLAN
The Plan obtained a determination letter dated September 29, 2016, in which the Internal Revenue Service (“IRS”) stated that the Plan, as then designed, was in compliance with the applicable requirements of the IRC. The Plan has been amended since receiving the determination letter. However, the Plan administrator believes that the Plan is currently designed and being operated, in all material respects, in compliance with the applicable requirements of the IRC. Therefore, no provision for income taxes has been included in the Plan’s financial statements.
The Master Trust obtained a determination letter dated May 30, 2014, in which the IRS stated that the Trust, as then designed, was in compliance with the applicable requirements of the IRC.  The Master Trust has been amended since receiving the determination letter.  However, the Plan administrator believes that the Master Trust is currently designed and being operated, in all material respects, in compliance with the applicable requirements of the IRC.  Therefore, no provision for income taxes related to the Master Trust is included in the Plan’s financial statements.
Accounting principles generally accepted in the United States of America require plan management to evaluate tax positions taken by the Plan and recognize a tax liability (or asset) if the Plan has taken an uncertain position that more likely than not would not be sustained upon examination by the IRS. The Plan administrator has analyzed the tax positions taken by the Plan, and has concluded that as of December 31, 2019 and 2018, there are no uncertain positions taken or expected to be taken that would require recognition of a liability (or asset) or disclosure in the financial statements. The Plan is subject to routine audits by the IRS; however, there are currently no audits for any tax periods in progress.

12

Navistar, Inc. 401(k) Plan for Represented Employees
NOTES TO FINANCIAL STATEMENTS
December 31, 2019 and 2018

NOTE E - PLAN TERMINATION
Although the Company expects to continue the Plan indefinitely, subject to collective bargaining requirements the Company, at its discretion, reserves the right to amend, modify, suspend or terminate the Plan, provided that no such action shall deprive any person of any rights to contributions made under the Plan. If the Plan is terminated, or contributions thereto have been completely discontinued, the rights of all participants to the amounts credited to their accounts shall be non-forfeitable and the interest of each participant in the funds will be distributed to such participant or his or her beneficiary at the time prescribed by the Plan terms and ERISA. If the Plan is terminated, Plan participants will become fully vested in any funds allocated to them.

NOTE F - RELATED-PARTY TRANSACTIONS
Empower Retirement, an affiliate of the Trustee, is the record keeper as defined by the Master Trust and, therefore, transactions with Empower Retirement qualify as party-in-interest transactions. Also qualifying as party-in-interest transactions are transactions relating to notes receivable from participants and Navistar common stock. As of December 31, 2019 and 2018, respectively, the Master Trust held 1,175,061 and 1,283,974 shares of Navistar common stock, respectively valued at $34,006,264 and $33,319,137. Fees paid by the Plan for the investment management services are computed as a basis point reduction of the return earned on each investment option, and are included in the net earnings of the Master Trust.

NOTE G – SUBSEQUENT EVENTS
Management of the Plan has evaluated subsequent events from December 31, 2019 through the date these financial statements were issued. Other than disclosed below, there were no subsequent events that require recognition or additional disclosure in these financial statements.
The SECURE Act, which was signed into law on December 20, 2019, changed the required minimum distribution age from 70 ½ to 72 for participants who turn age 70 ½ on or after January 1, 2020.
In response to the pandemic outbreak of a novel coronavirus (COVID-19), the United States Congress passed the Coronavirus Aid, Relief and Economic Security Act (CARES Act) to provide expanded access to retirement plan accounts. Effective April 23, 2020, the Plan adopted provisions under the CARES Act related to distributions, loans and deferred loan repayments for those participants who qualify under the CARES Act.
As disclosed in its Form 8-K filed on January 31, 2020, on January 30, 2020 Navistar received an unsolicited proposal from TRATON SE, which is approximately 90% owned by Volkswagen AG, regarding a potential transaction to acquire all the outstanding shares of Navistar that it does not already own for $35.00 per share in cash. Consistent with its fiduciary duties, the Navistar Board of Directors, in consultation with its financial and legal advisors, is carefully reviewing and evaluating the proposal in the context of its strategic plan for Navistar in order to determine the course of action that Navistar believes is in the best interest of Navistar and its stakeholders.
On March 23, 2020, the TRATON Group issued a press release in conjunction with the release of its Annual Report indicating that the COVID-19 pandemic prevents it from providing any reliable guidance regarding business performance in 2020. As of the date hereof, the TRATON Group’s proposal has not been withdrawn. Developments arising since the date the TRATON Group’s proposal was made may impact the likelihood and terms of any transaction, including, without limitation, developments relating to the COVID-19 pandemic. There can be no assurance that any definitive, binding proposal will be made, that any agreement will be executed or that the transaction contemplated by the proposal or any other transaction will be approved or consummated. Until Navistar enters into, or declares that it will not enter into, a definitive agreement with respect to the transaction contemplated by the TRATON Group’s offer or any alternative transaction, the value of the Plan’s interest in Navistar common stock in the Master Trust may change to reflect market assumptions as to whether any transaction is likely to occur.

13


SUPPLEMENTAL SCHEDULE

14

Navistar, Inc. 401(k) Plan for Represented Employees
SCHEDULE H, LINE 4i - SCHEDULE OF ASSETS (HELD AT END OF YEAR)
December 31, 2019


Identity of issue
 
Description of investment
 
Cost**
 
Current value
*Various participants
 
Participant loans at interest rates of 4.25% to 10.50%
 
 
 
$
7,844,431

*     Party-in-interest
**     Cost information is not required for participant-directed investments and, therefore, is not included.


15
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